Collision Insurance Coverage

What Is Collision Insurance?

Collision insurance is auto coverage that can help pay for covered damage to your own vehicle after a collision. It can apply when your vehicle hits another vehicle or an object such as a fence, guardrail, tree, or pole. It may also apply to rollovers and other qualifying single-vehicle crashes.

Collision coverage generally includes a deductible and can apply whether or not you caused the accident, although another driver’s liability insurance may also be relevant when that driver is legally responsible. Coverage depends on the policy terms, the circumstances of the loss, the selected deductible, and the value of the insured vehicle.

Collision insurance is different from comprehensive insurance, which generally covers certain non-collision losses such as theft, vandalism, weather, and animal-related damage. It is also different from liability insurance, which helps protect against certain injuries or property damage you’re legally responsible for causing to others.

Key Takeaways

• Collision insurance helps protect your own vehicle after certain covered collisions with another vehicle or object, rollovers, and other qualifying crashes.
• Collision coverage generally includes a deductible, which is the amount you’re responsible for on a covered claim before the insurer pays its covered portion.
• Collision insurance is generally optional under state law, although a lender or leasing company may require it for a financed or leased vehicle.
• Collision and comprehensive insurance cover different types of vehicle damage. Collision generally addresses crashes, while comprehensive generally addresses certain non-collision losses.
• Collision insurance doesn’t cover every accident-related expense. Injuries and damage you’re legally responsible for causing to others are generally addressed through applicable liability coverage.
• Whether collision coverage makes sense depends on your vehicle and financial situation, including its value, deductible, financing requirements, and how much you could afford to pay for repairs or replacement yourself.

When Does Collision Insurance Apply?

Collision insurance focuses on physical damage to the insured vehicle caused by a covered collision. Common examples include:

What Doesn’t Collision Insurance Cover?

Collision insurance does not cover all types of vehicle damage or accident-related expenses. It generally does not cover:

• Theft
• Vandalism
• Fire
• Hail, flooding, and other weather-related damage
• Damage caused by hitting an animal
• Mechanical breakdowns
• Normal wear and tear
• Injuries to you or your passengers
• Injuries you cause to other people
• Damage you cause to another person’s vehicle or property

Many non-collision losses may instead fall under comprehensive insurance, depending on the policy and circumstances. Damage or injuries you are legally responsible for causing to others are handled separately through applicable liability insurance coverage.

Coverage always depends on the terms, conditions, limits, and exclusions of the applicable policy.

What Does Collision Insurance Protect?

Collision insurance primarily protects the insured vehicle against qualifying physical damage from a covered collision. It doesn’t directly provide medical coverage for you or your passengers, and it doesn’t replace liability coverage for injuries or property damage you’re legally responsible for causing to others.

Whether collision coverage applies when another person is driving your insured vehicle depends on the policy, the driver, the vehicle’s use, and the circumstances. Review your policy or ask an insurance representative about household members, occasional drivers, excluded drivers, or other vehicle-use situations.

What Happens After an Accident If You Have Collision Insurance?

The exact claim process varies, but the general mechanics are straightforward:

1. A covered collision damages the insured vehicle.
2. The insurer evaluates the damage and determines whether the vehicle can be repaired or is a total loss.
3. Your collision deductible applies to the covered claim.
4. If the vehicle can be repaired, the insurer pays the covered amount based on eligible repair costs and policy terms.
5. If the vehicle is a total loss, the settlement is generally based on the vehicle’s actual cash value, subject to the deductible, policy terms, and applicable state rules.

Collision insurance can reduce the amount you would otherwise have to pay yourself after a covered crash, but it does not necessarily pay every expense associated with the loss.

How Does a Collision Insurance Deductible Work?

A collision deductible is the amount you are responsible for on a covered collision claim before the insurer pays its covered portion.

This is a simplified example. Actual claim payments depend on the policy and covered loss.

A higher collision deductible can generally reduce the premium for that coverage, but it also means you would pay more yourself after an eligible claim. A lower deductible generally reduces your out-of-pocket share of a covered claim, but the premium may be higher.

Choose a Deductible You Could Actually Pay

The lowest premium is not always the most practical choice. Consider whether you could comfortably pay the deductible after an unexpected crash.

Collision and comprehensive coverage can have separate deductibles, so check each part of the policy rather than assuming a single deductible applies to all types of vehicle damage.

How Much Does Collision Insurance Cost?

The cost of collision insurance varies based on the vehicle, insurance company, deductible, location, and other rating factors permitted in your state.

Your deductible can also affect the cost of collision coverage. Choosing a higher deductible may lower your premium, but it increases the amount you’re responsible for after a covered loss. A lower deductible may increase your premium but reduce your out-of-pocket responsibility after an eligible claim.

When comparing collision insurance, consider both the premium and the amount you could comfortably afford to pay after an accident. InsureOne can help you review available coverage, deductibles, and pricing based on your vehicle and insurance needs.

What Happens If My Car Is a Total Loss?

After a serious accident, an insurance company may determine that a vehicle is a total loss rather than repair it. This generally happens when the cost or practicality of repairing the vehicle meets the insurer’s total-loss criteria and applicable state requirements.

When a covered collision results in a total loss, the claim settlement is generally based on the vehicle’s actual cash value before the accident, minus the applicable deductible and subject to the terms of the policy.

How Is Actual Cash Value (ACV) Determined?

Actual cash value, or ACV, is an estimate of what your vehicle was worth immediately before the covered loss. It isn’t necessarily the same as the price you originally paid for the vehicle.

When determining ACV, an insurer may consider factors such as the vehicle’s age, mileage, pre-accident condition, features and equipment, local market information, and comparable vehicles.

Because vehicles generally change in value over time, the settlement for a totaled vehicle may be different from its original purchase price.

What If You Owe More Than the Vehicle Is Worth?

Collision coverage and an auto loan are separate. If a financed vehicle is totaled and the remaining loan balance exceeds the vehicle’s covered value, collision insurance generally does not pay the loan shortfall because the balance is still owed.

GAP insurance is designed to cover certain loan or lease shortfalls, when applicable. Review the terms of any GAP product separately from collision coverage.

Is Collision Insurance Required?

Collision insurance is generally not required by state law. However, a lender or leasing company may require it while a vehicle is financed or leased.

After the vehicle is fully paid off and no financing or lease agreement requires collision coverage, the decision is generally up to the vehicle owner. At that point, the vehicle’s value, deductible, repair costs, and your ability to replace the vehicle become especially important.

Should I Have Collision Insurance on My Car?

There is no single rule that works for every driver or vehicle. One way to evaluate the coverage is to consider what a serious accident would mean for you financially. Ask yourself:

• Whether the vehicle is financed or leased
• The vehicle’s current value
• The collision deductible
• Whether you could afford major repairs after an accident
• Whether you could replace the vehicle yourself after a total loss
• How much you depend on the vehicle for work or everyday transportation
• The vehicle’s age and condition
• How much out-of-pocket risk you are comfortable taking after a collision

Vehicle age alone does not determine whether collision coverage makes sense. An older vehicle may have a modest market value but still be difficult for its owner to repair or replace without insurance assistance.

How Is Collision Insurance Different From Other Auto Coverage?

Collision insurance is one part of an auto insurance policy. Other coverages protect against different types of accidents, damage, and financial risks.

Is Collision Insurance Part of Full Coverage?

Collision insurance is commonly one component of what drivers call “full coverage.” Full coverage is not a standardized policy or an individual coverage type. The term commonly describes an auto policy that combines liability, collision, and comprehensive coverage.

Other coverages may also be included depending on the policy, state, and driver’s selections. Review the actual coverages, limits, deductibles, and exclusions rather than relying only on the phrase.

Learn more about what may be included in full coverage auto insurance.

Frequently Asked Questions About Collision Insurance

Does Collision Insurance Cover a Rental Car?

Collision coverage from your personal auto policy may extend to certain rental vehicles, but coverage varies by policy, rental agreement, vehicle type, and circumstances. Review your auto policy and the rental company’s coverage options before deciding what protection you need.

Does Collision Insurance Cover Someone Else Driving My Car?

Collision coverage may apply to damage to your insured vehicle when another person is driving it, depending on who was driving, whether they had permission, how the vehicle was being used, and the terms of your policy. Certain drivers or uses may be excluded, so check your policy for details.

What Happens to My Collision Coverage If Someone Else Hits My Car?

If another driver is responsible for an accident, their property damage liability coverage may apply to damage to your vehicle. Your own collision coverage may also cover damage, subject to your deductible and policy terms. How the claim is handled can depend on the accident, available coverage, and state rules.

Can I Have Collision Insurance Without Comprehensive Insurance?

Collision and comprehensive are separate coverages, and availability can vary by insurance company. If your vehicle is financed or leased, your lender or leasing company may require both. Check your financing agreement and policy before removing either coverage.

Does Collision Insurance Pay for a Rental Car While My Car Is Being Repaired?

Collision insurance itself does not necessarily include reimbursement for a temporary rental vehicle. Rental reimbursement is typically a separate optional coverage that may help with eligible transportation expenses after a covered loss. Availability and benefits vary by policy and insurer.

When Should I Review My Collision Coverage?

It can be useful to review collision coverage when your vehicle’s value changes significantly, you pay off an auto loan, your deductible no longer fits your budget, or you buy or lease another vehicle. Reviewing your coverage periodically can help make sure it still fits your vehicle and financial situation.